Norway’s deal to remain in EU energy union likely to scupper £2bn hydro power interconnector to Scotland

Existing and planned interconnenctors, National Infrastructure Commission
Existing and planned interconnectors, National Infrastructure Commission

A political compromise in Oslo to allow Norway to remain in the EU Energy Union – fearing a UK-style Brexit bourach – could scupper a £2 billion interconnector planned to connect Scotland with Norway.

The centre-right minority government feared that rejecting the EU’s Third Energy Package, designed to enhance energy flows and improve regulatory oversight, would put Norway on a ‘slippery slope to a Brexit-like ending of its close EU relations’.

For the past 24 years, Norwegian companies have enjoyed single market access on equal terms with companies in the EU via the European Economic Area treaty (aka ‘EEC) in return for the country’s adoption of EU common market regulations.

Opposition to the energy bill came from politicians and trade unions fearing Norway could lose control of its abundant hydroelectric resources.

To secure backing for the regulation, the government struck a compromise in advance with the main opposition Labour Party, promising that all power cables connecting Norway to other countries should be state-owned.

However, the deal with Labour could lead to the cancellation of North Connect, a planned 2-billion-euro private power cable between Norway and Scotland, which its backers had hoped to put into operation by 2023.

If North Connect does eventually go ahead, it would have to be under public ownership, Labour said.

Under the EEA treaty, Norway retains the right to refuse the adoption of EU rules, but has never done so as this would allow the EU to retaliate by suspending other parts of the agreement.

26 Mar 2018

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